JMBM / April 1999 - Many employers want to avoid any sign
of compromise with a union, but neutrality agreements can be important
strategic took for developers and owners in at least two situations:

where governmental approvals require accommodation of the union, and

where it is justified to establish peaceful coexistence with the union.

A "neutrality agreement" typically involves an agreement between an employer
and a labor organization in which the employer pledges not to oppose union
organizing efforts, and may also extract certain promises from that union.

Owners and developers of hotels today will often find that they cannot
get critical entitlements or permits they need for new development and
other activities unless they give the bureaucrats a major concession for
their union constituencies. These representatives or administrators want
to acknowledge their union supporters - assisting in the unionization process,
and one of the most common "suggestions is a neutrality agreement.

The "standard" union version of a neutrality agreement amounts to complete
surrender - you give up everything when you have serious
options available. We have been successful in negotiating some substantial
improvements from this standard, including the union's agreement not to
strike, leaflet, pamphlet or engage in any negative publicity during a
negotiated period. In our negotiations, we strive to obtain union agreement
not to join with other trade unions in their disputes with the company.
In addition, the neutrality agreement may obligate the union to refrain
from activities to thwart the efforts of the developer or operator with
a particular project.

One of labor's favorite tactics is to maneuver behind the scenes with
local elected officials in an attempt to delay or prevent planning commission
members, city councilmen, or other local politicians from issuing building
permits, approving zoning plans or otherwise making it easy for commercial
developers to proceed with a project.

Labor has also been known to file questionable complaints with state
regulatory agencies to burden the company with administrative proceedings.
This negative publicity and misuse of process can really hit a company's
bottom line and delay or even stop a project before it gets off the ground.
Negotiating the right neutrality agreement can avoid these costly scenarios.

JMBM's Global Hospitality Group lawyers are leaders
in the area of negotiating neutrality agreements. We were at the forefront
of experience with neutrality agreements when they were relatively rare,
and we have extended our leadership in this area as neutrality agreement
situations have proliferated in the past year or so.

Patrick W. Jordan, who heads our San Francisco labor practice, recently
successfully negotiated a neutrality agreement with a local union on behalf
of a major hospitality client.

To date, the project is underway without incident. Mr. Jordan's
advice to clients is, "Don't give it all up! If you sign the standard union
neutrality agreement, you have gotten nothing. You have to know your strengths
and how to increase your bargaining leverage." Knowing how to structure
these agreements and carrying out the necessary elements to make them work
for the employer are the key ingredients.

Marta Fernandez, a labor partner in the firm's Los Angeles office, who
also represents several developers and hospitality clients, shares Mr.
Jordan's views. "We like to be involved at the very outset - in the
early planning and strategy phases and way before any negotiations begin.
That is when the tone and direction are set and where we can bring great
value and maximum benefit to the team."